In a world where we are in effect, in the second major recession of this century and the worst since the Great Depression of the 1930’s, cargo operators are having a surprisingly good time.
Overall cargo business is around 21% down, which in any other scenario would lead to the collapse of many of the remaining freighter companies, and severe fleet reductions in those that survived.
However, with global passenger airlines 75% down as an average, the availability of belly cargo – which in 2019 was as much as 53% of the cargo market, with A350 and 787 offering ever increasing availability, declined so far, that the cargo-only airlines have been left with more than they can handle. Cargo-only airlines have seen the amount of freight they have been asked to carry rise by 2% in August and it’s 8% higher than it was in 2019.
Ironically, we are now left with a capacity shortage, one that is likely to persist for several years.
Boeing Global Services has seen high demand for two type of aircraft, types that have suddenly fallen out favour with the passenger airlines – the 767-300ER and the 737-800. These are in such demand that from Israel to China conversions are in full swing on “significant numbers of aircraft’ and more are having to be sourced.
And if the need wasn’t already there, 2021 is going to provide an opportunity like no other. With billions of doses of vaccines against Covid-19 about to be shipped world wide, several of them needing very specialised handling; Pfizer-BioNtech’s needs -82 degrees Centigrade/ -116 degrees Farenheit) for shipment before its reconstituted in a saline solution, after which it lasts just 6 hours, air freight operators have never had such an opportunity to shine.
Norwegian €6 billion in debt proves it was a financial disaster waiting to happen
In order to wind up the remnants of Norwegian, it would leave, according to Irish accountants working through its bankruptcy protection filing, zero assets and a deficit of just below €6 billion (US$7.2 billion).
It would mean that there would be no way to pay creditors, bond holders, shareholders, lease companies, anyone to whom it owes money would get nothing.
Norwegian does not have enough working capital to pay its creditors, and it doesn’t have any money to get it past March 2021.
However, the report says the airline has a reasonable prospect of survival if certain steps proposed by management, including re-negotiating lease payments on their aircraft, deferring some loan repayments, cutting their fleet and cancelling future aircraft orders are done quickly.
In order to do this it has got to act incredibly fast, and someone has to put money into its cash account to get it past March. Legal requirements in the UK and EU (including Ireland) require around 30-40 days of operating cash before an airline can continue to function without notifying the authorities it may be at risk of collapse. That means it would have to have resolved its issues at the latest by around mid-February.
The question is who is prepared to take the risk?
Norwegian’s existing managers should not be the ones to move forward, the airline needs to be sold to people who know what they are doing, willing to do what needs to be done. Its existing managers didn’t follow through on their original plan, why does anyone want to trust them with another?
The irony of all this is that rather than teach the greedy manufacturers and leasing companies a lesson it not being so easily conned by an opaque airline, the mere size of the debt is so vast that they’re allowed to carry on and try yet again – by borrowing even more.
JetBlue ready to start in London
JetBlue is due to take delivery of its first A321neoLR early next year and has announced tyat is has slots at both London Gatwick and London Stansted, but it really wants neither of those and access to Heathrow, because that’s where the real London access point everyone wants is.
Heathrow while in the doldrums right now, technically is still at slot capacity, and unless someone sells slots – a pair can go for ridiculous amounts of money, as much as £75m has been paid, access is hard to get.